Tesla Shares May Reach $960 in Early 2021, Biggest Bull Says

Esha Dey

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Bloomberg•January 21, 2020

 

 

(Bloomberg) -- Tesla Inc.’s most bullish Wall Street analyst predicts the electric-car maker’s dizzying rally will accelerate this year and that the stock will trade in the $640-to-$960 range in early 2021.

New Street Research analyst Pierre Ferragu anticipates the company will sell 2 million to 3 million cars per year after 2025 at industry-leading margins, justifying a market capitalization of $230 billion to $350 billion, or about $1,100 to $1,700 per share.

“The stock will remain volatile, as the spread between bull and bear cases remains wide,” said Ferragu, who boosted his price target to a Street high. “And God only knows what the next controversy will be.”

Tesla is set to report quarterly earnings next week. Shares of the company rose as much as 6.9% to touch $545.90 in New York on Tuesday, and have increased more than 100% over the past three months. A surprise third-quarter profit and strong deliveries for the fourth quarter helped fuel the rally, along with the opening of its China plant.

Ferragu, who raised his price target to a $800 from previous $530, expects the company to beat estimates for free cash flow when it releases fourth-quarter earnings on Jan. 29.

He also predicts 2020 delivery guidance will exceed projections, and sees a potential drop in gross margins in the first half of the year as Shanghai-assembled Model 3s -- which have higher fixed costs per car -- increase in the overall mix.

Earlier on Tuesday, Bernstein analyst Toni Sacconaghi struck a cautious note, saying the Shanghai Gigafactory production could pressure margins in fourth and first quarter.

(Updates share move in fourth paragraph.)

To contact the reporter on this story: Esha Dey in New York at [e-mail]

To contact the editors responsible for this story: Brad Olesen at [e-mail], Will Daley

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